Opinion
Civil Action No. H-02-1306
July 17, 2002
MEMORANDUM AND ORDER
Pending is the United States of America's Motion to Dismiss and/or for Summary Judgment (Document No. 5). After having carefully reviewed the motion, response, reply, surreply, and applicable law, the Court concludes that the Motion for Summary Judgment should be granted.
I. Background
The Internal Revenue Service (IRS) placed a lien upon Plaintiff Jose Perez's property and rights to property in 1989 based upon deficiencies in Perez's income tax returns for the years 1984 through 1987. Several years later, in 1997, the IRS levied upon Perez's wages. In 2000, Perez filed an action against the United States in the United States District Court for the Western District of Texas alleging that the IRS liens were invalid. In his Third Amended Complaint in that action, Perez alleged that the IRS violated 26 U.S.C. § 6331 by levying on his wages without first serving him notice, and that the IRS's liens and collection actions were time-barred. Perez conceded signing a Form 900 waiver, which extended the statute of limitations for the IRS's collection actions, but argued that the waiver was invalid. Perez requested the court to remove the federal tax lien from his property and rights to property.
The district court dismissed Perez's § 6331 claim, holding that the court lacked subject matter jurisdiction over the claim because the claim was raised in an administrative action over which the Tax Court, not federal district court, had jurisdiction. The court rejected Perez's argument that the Form 900 waiver was invalid, and held that the statute of limitations did not bar the IRS's collection actions. On March 8, 2002, the court signed a Final Judgment denying all relief requested by Perez and entering monetary judgment in favor of the United States. Perez appealed that order to the Fifth Circuit. In addition, Perez filed or transferred his claims to the United States Tax Court. Perez's Fifth Circuit appeal and his action in Tax Court both are currently pending.
Before he appealed the judgment entered against him in the Western District of Texas, Perez filed this action in the Southern District of Texas, once again requesting removal of the aforementioned liens against his property. Perez again argues that he did not receive notice prior to the IRS's levy on his wages pursuant to 26 U.S.C. § 6331, objects to his Form 900 waiver, and argues that because the Form 900 waiver is invalid, the IRS's tax collection action became time-barred on June 6, 1998.
The United States moves to dismiss or for summary judgment on Perez's claims on the ground that they are res judicata. Because the United States has submitted evidence not attached to the pleadings, and because the United States clearly placed Perez on notice of its alternative motion for summary judgment, the United States's motion will be considered under the standards for a motion for summary judgment.
II. Standard of Review
Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. Civ. P. 56(c). The moving party must "demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2553 (1986).
Once the movant carries this burden, the burden shifts to the nonmovant to show that summary judgment should not be granted. See id. at 2553-54. A party opposing a properly supported motion for summary judgment may not rest upon mere allegations or denials in a pleading, and unsubstantiated assertions that a fact issue exists will not suffice. See Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998) (citingAnderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2514-15 (1986)). "[T]he nonmoving party must set forth specific facts showing the existence of a `genuine' issue concerning every essential component of its case." Id.
In considering a motion for summary judgment, the district court must view the evidence through the prism of the substantive evidentiary burden. See Anderson, 106 S.Ct. at 2513-14. All justifiable inferences to be drawn from the underlying facts must be viewed in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S.Ct. 1348, 1356 (1986). "If the record, viewed in this light, could not lead a rational trier of fact to find" for the nonmovant, then summary judgment is proper. Kelley v. Price Macemon, Inc., 992 F.2d 1408, 1413 (5th Cir. 1993) (citing Matsushita, 106 S.Ct. at 1351). On the other hand, if "the fact finder could reasonably find in [the nonmovant's] favor, then summary judgment is improper." Id. (citingAnderson, 106 S.Ct. at 2511). Even if the standards of Rule 56 are met, a court has discretion to deny a motion for summary judgment if it believes that "the better course would be to proceed to a full trial." Anderson, 106 S.Ct. at 2513.
III. Discussion
"Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." See Allen v. McCurry, 101 S.Ct. 411, 414 (1980). The judgment puts an end to the cause of action, meaning that it cannot be re-submitted between the parties or their privies upon any ground whatsoever, absent fraud or some other factor invalidating the judgment. See Nevada v. United States, 103 S.Ct. 2906, 2918 (1983); Commissioner v. Sunnen, 68 S.Ct. 715, 719 (1948).
"The preclusive effect of a prior federal court judgment is controlled by federal res judicata rules." Ellis v. Amex Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 2000). Res judicata applies when four elements are satisfied: (1) the parties in both suits must be identical or at least in privity; (2) the prior judgment must have been rendered by a court of competent jurisdiction; (3) there must have been a final judgment on the merits in the prior action; and (4) the same claim or cause of action must be involved in both cases. Id. A "transaction test" is used to determine whether two cases involve the same cause of action. See id. at 938; Aprilectric Power Partners, Ltd. v. General Elec. Co., 20 F.3d 663, 665 (5th Cir. 1994).
Under this approach, the critical issue is not the relief requested or the theory asserted but whether the plaintiff bases the two actions on the same nucleus of operative facts. If the factual scenario of the two actions parallel, the same cause of action is involved in both. The substantive theories advanced, forms of relief requested, types of rights asserted, and variations in evidence needed do not inform this inquiry.Agrilectric, 20 F.3d at 665 (quotation footnotes omitted); see also Ellis, 211 F.3d at 938 n. 1.
Perez contends in his current lawsuit that (1) the IRS failed to serve him with pre-seizure notices under 26 U.S.C. § 6331 prior to levying on his wages in 1997, and (2) the IRS's tax collection action is time-barred because his Form 900 waiver is invalid. These claims are based on the precise nucleus of operative fact that formed the basis for his identical claims already raised and finally adjudicated in the Western District of Texas against the same defendant. See Aprilectric, 20 F.3d at 665. Perez's attempts to raise the same claims in this action are barred by res judicata.
Perez argues that his § 6331 claim is not barred by res judicata because that claim was dismissed in his prior action for lack of subject matter jurisdiction. A dismissal for lack of subject matter jurisdiction is not on the merits, and does not make an entire subsequent action res judicata. Equitable Trust Co. v. Commodity Futures Trading Comm'n, 669 F.2d 269, 272 (5th Cir. 1982). However, principles of res judicata apply to judicial determinations regarding subject matter jurisdiction.Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 102 S.Ct. 2099, 2104 n. 9 (1982); Equitable Trust Co., 669 F.2d at 272. "[A] dismissal for lack of subject-matter jurisdiction, while not binding as to all matters which could have been raised, is, however, conclusive as to matters actually adjudged." Equitable Trust Co., 669 F.2d at 272 (quotation omitted). Therefore, a determination by a federal district court that it lacks subject matter jurisdiction over an action bars access to the federal courts and is res judicata as to the lack of the federal court's power to act. See id. at 272-73; see also Darlak v. Bobear, 814 F.2d 1055, 1064 (5th Cir. 1987); Daigle v. Opelousas Health Care, Inc., 774 F.2d 1344, 1348 (5th Cir. 1985).
In dismissing Perez's § 6331 claim, the Western District of Texas held: "The levy issue is the subject matter of Plaintiff's administrative action, and, as noted in this Court's April 16, 2001, Order, jurisdiction over the administrative action does not lie with this Court." (Memorandum Opinion, Ex. 2 to Defendant's Motion to Dismiss and/or for Summary Judgment, at p. 20.) The prior order to which the court referred held that the Tax Court, not the federal district court, had jurisdiction to review Perez's administrative action. (Order Regarding Defendant's Motion to Dismiss, Ex. 1 to Defendant's Motion to Dismiss and/or for Summary Judgment, at pp. 5-6.) Under principles of res judicata, the judicial determination by the Western District of Texas that it lacked jurisdiction over Perez's claim precludes Perez's attempt to relitigate the same claim in another federal district court.
Perez also argues that res judicata does not apply to his claims because the final judgment in his prior lawsuit is currently on appeal. A case pending appeal is res judicata unless and until it is reversed.Fid. Standard Life Ins. Co. v. First Nat'l Bank Trust Co. of Vidalia, Georgia, 510 F.2d 272, 273 (5th Cir. 1975); Prager v. El Paso Nat'l Bank, 417 F.2d 1111, 1112 (5th 1969); 18A CHARLES ALAN WRIGHT, ARTHUR R. MILLER EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 4433, at pp. 71, 78-79 (2d ed. 2002). Because Perez's present claims against the United States arise from the same nucleus of operative fact as the claims he brought against the United States in the Western District of Texas, upon which final judgment was entered, Perez's claims are barred by res judicata and will therefore be dismissed.
IV. Order
Based on the foregoing, it is
ORDERED that United States of America's Motion for Summary Judgment (Document No. 5) is GRANTED, and this case is DISMISSED.
The Clerk shall notify all parties and provide them with a true copy of this Order.